No liquidity problem, worst phase of economic slowdown over: Sitharaman

The finance minister met private-sector lenders and financial institutions weeks after meeting public sector bankers.

New Delhi, Sep 26: Amid rising concerns over the slowing economy, Finance Minister Nirmala Sitharaman, who held a meeting with private banks today, said that consumption is happening and demand will return to push the economy to move at a faster rate.

The finance minister met private-sector lenders and financial institutions weeks after meeting public sector bankers. She indicated that economic slowdown seems to have bottomed out and the coming festive season will help the economy start looking up.

"I have not heard liquidity as a problem from anybody here today," ANI quoted Sitharaman as saying after her meeting with heads of private banks on credit disbursal and liquidity.

"On the whole it was very tonic-like meeting, where I heard a lot of positive things. Not one voice said there was a concern, shortfall of demand. None of them voiced liquidity concerns," she said.

She also said that micro-finance units at the meeting have vouched for growth and are extending loans and that there is demand in the country.

"On the whole, it was a very tonic-like meeting where I heard good things, positive thing," she said, and added that "the message I got is that consumption is happening".

The GDP growth in the first quarter of the current financial year slipped to an over six-year low of 5 per cent. The minister further said the private sector banks and financial institutions told her that the slump in commercial vehicle sales is "cyclical" and likely to pick up in the next one or two quarters.

Last week, Sitharaman slashed corporate tax rate for domestic manufacturing companies from 30% to 22% and for new manufacturing firms from 25% to 15% to revive the economy which grew the slowest at 5 per cent in the last six years in the June quarter.